Poets&Quants’ Top MBA Startups Of 2017

Founders of some of the top MBA startups

West Coast, best coast?

If the deciding factor was based solely on successful recent MBA-founded startups, the answer would be a resounding yes. For the fourth time since 2013, Poets&Quants has ranked startups coming out of the world’s most elite schools based on one criterion: venture capital-backed funding. And for the first time, Harvard Business School cannot claim to have more startups on the list than any other school. After dominating last year’s list with 42 ventures (out of 100 on the list), the HBS machine has dropped to 24 ventures raising a combined $618.29 million. Meanwhile, Stanford’s Graduate School of Business — located practically a stone’s throw from VC epicenter Sand Hill Road — added a startup from last year’s list to tie HBS at 24 total ventures raising a combined $958.64 million.

But neither prestige school can claim the top MBA startup on this year’s list. It’s London-based food delivery venture, Deliveroo, founded by William Shu, a 2012 MBA graduate of Pennsylvania’s Wharton School, and long-time friend, Greg Orlowski. Since 2013, Deliveroo has attracted $474.59 million in VC-backing, buoyed by a massive $275 million Series E round announced this past April. Deliveroo is the first venture to top the list not coming from Boston or Palo Alto.

KELLOGG DOUBLED ITS MBA STARTUPS ON THE LIST

What’s more, this year’s ranking of the top 100 MBA startups saw the lowest number of Stanford GSB and HBS ventures in the five years since we’ve first compiled the list. At a combined 48 ventures, the two powerhouse entrepreneurship schools have dropped from 71 total ventures in 2015 and 65 on last year’s list to 48. The drop is in part a result of stronger numbers from such rival schools as Pennsylvania’s Wharton School, which jumped from five ventures on last year’s list to 12 this year. Similarly, Columbia Business School claimed 11 ventures this year — up from seven last year. And Northwestern’s Kellogg School of Management doubled their representation from four to eight.

William Shu, founder of No. 1 Deliveroo in London

But Deliveroo’s number one placement crushed it. Amazingly, Deliveroo’s April Series E round was higher than the next closest startup’s total funding. Linio — founded by a team of MBAs from New York University’s Stern School of Business, MIT’s Sloan School of Management, and HBS — claimed second with $230.5 million, up from seventh last year. Third on the list is San Francisco-based food delivery platform, DoorDash, which has raised a total of $186.7 million and was founded by a team from Stanford GSB. DoorDash finished 15th on last year’s list. Fellow GSB-founded venture, NuBank, followed DoorDash with $178.3 million in funding, propelling the firm from 18th last year to fourth. Rounding out the top five is Grofers — yet another food delivery platform — founded by a team from Columbia Business School. Of the 100 startups on this year’s list, 70 earned a funding round this year totaling just under $1.3 billion — a sizable portion of the $2.9 billion five-year total for the 100 startups. That $2.9 billion is a significant drop from last year’s $5.2 billion and 2015’s $4.9 billion.

Interestingly, three out of the top five ventures are in some form of food delivery–each based on a different continent. Of the top five, only one (DoorDash) is headquartered in the U.S., proving that at least a handful of international students have been very successful earning MBAs in the U.S. and starting ventures in their home countries. Still, the startup pipeline continues to run through the West Coast with California being home to 35 of the 100 ventures on this list. Some 31 of those reside in California’s Bay Area — more than any other metropolitan area. A few other ventures making big moves on this year’s list were Stanford-founded Augmedix (up to 11 from 27), fellow Stanford-founded Branch (up to 12 from 33), and Capital Float — another Stanford-founded venture — which gained 23 spots from 37 to 14. Each venture earned significant funding rounds in 2016. To be included on the list, ventures must have been founded between January 1, 2012, and December 31, 2016, and have at least one founder to graduate with an MBA during the same time frame.

HIGHEST MINIMUM CUTOFF FOR THE TOP 100 IN RECENT YEARS

Despite quiet rumblings of frothy VC investments slowing, this year’s list proves at least a select group of MBA-founded ventures have been able to earn more investor dough. While the startup at the top this year raised significantly less than the nearly $1.4 billion raised by last year’s winner SoFi — a definite outlier — the bottom of the list is stronger. This year, the 100th spot went to Simple Mills, a food manufacturing venture founded by Katlin Smith from Chicago’s Booth School of Business that has received  $4.22 million in funding. Last year, the bottom dropped to $2.65 million for 100th.

Once again, MBA-founded ventures are impacting and disrupting a diverse set of markets and industries. Dia&Co, for example, is a fashion startup, which specializes in selling women’s clothing in sizes 14 to 32. The HBS-founded venture was launched in 2014 by Lydia Gilbert and Nadia Boujarwah and debuted on the list tied for 21st, thanks to a September venture funding round of $20 million. Or consider RigUp, an Austin, Texas-based oil and gas procurement software venture founded by a team from Columbia Business School. A $15 million Series A round announced in April rocketed the startup to 23rd on this year’s list. FourKites, a Northwestern Kellogg School of Management-founded venture, is changing the logistics of trucking and shipping in the U.S. and won a $13 million Series A round in October to vault into the top 25 of this year’s list.

Vince Ponzo is the senior director at the Eugene Lang Entrepreneurship Center at Columbia Business School. Courtesy photo

“I think the proliferation of startups from a business and cultural standpoint plays a big part in the interest and growth,” says Vince Ponzo, the senior director of the Eugene Lang Entrepreneurship Center at Columbia Business School. Ponzo says major entrepreneurial success stories glorified by the media and shows like HBO’s Silicon Valley and ABC’s Shark Tank have increased society’s awareness and exaltation of startups and entrepreneurship. “Today, you can watch two people pitch their business on Shark Tank and then literally, an hour later, buy their product online and use it,” Ponzo continues. “Same with crowdfunding. There is a much lower barrier between seeing a startup and actually being a user of the product.”

According to Clare Leinweber, the managing director of Penn Wharton Entrepreneurship at Pennsylvania’s Wharton School, technology has greatly increased the ability to try out startup ideas while in business school. “It’s become easier to test out ideas,” she says, noting the program she heads up recently changed its name from Wharton Entrepreneurship to Penn Wharton Entrepreneurship. The switch, she says, is another reason why business school continues to be an ideal place to start a venture. “Penn is a rich environment for finding team members who complement your own abilities,” continues Leinweber, while explaining her office has made recent efforts to continually invite students across Penn’s departments and colleges to use the program’s resources.

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  • I think you’re absolutely right, Rafael. I think your second point, in particular, is very pertinent to this list. Those three food delivery platforms reflect a segment of the tech VC market that is very interested in the potential right now. We’ll have an article focusing on that in a week or so.

  • Rafael Coven

    This is very interesting stuff, but it’s useful to keep in mind that the amount of money is raised by a company may not be highly correlated with the quality or success of the venture. The amount raised (and hence valuation) might equally be reflective of 1) the capital intensity of the business mode, b) the sector’s current level of hype, and c) location of the company. Certainly, the companies located far from VC hot spots over offer better valuations for investors.